San Leandro, California
Industry: Industrial & Equipment
Products: Springs and stamping solutions
President Hale Foote breaks with tradition by utilizing Silicon Valley models at the Bay Area's largest spring and stamping company.
Founded by two Scandinavian Americans, Scandic began manufacturing coil springs for a variety of industries, and later moved into metal stamping as a complementary service.
Foote recently oversaw an expansion into a 35,000-square-foot facility at the company's location in San Leandro. While the business is booming, he recalls when things weren't always looking so good, especially in their early days as an automotive manufacturer. "Scandic had a horrible experience as an automotive supplier in the 1980s," says Foote. "We avoided that market until I thought we were ready and decided in the mid-1990s to work as a Tier-2 supplier to the New United Motor Manufacturing plant in Fremont, California. We successfully supported Toyota there until the plant closed, and we picked up with [subsequent tenant] Tesla soon after."
Scandic was successful with Tesla because both companies operate with a Silicon Valley mindset, rather than the traditional Detroit way of manufacturing. "The old rule of bend radiuses and safety margins have gone out the window," says Foote. "Now it's push til it breaks and make something better -- quickly."
This rapid prototyping model has proven to be very successful for Scandic, but it hasn't been without its challenges. "We had to tell our workforce on the floor to not worry about pushing things to the limit," says Foote. "They were worried that the machine might break. We asked our operators, 'What's the worst that can happen? We break a servo or a cam. When you weigh the cost, it's a $70 piece.' They're used to doing things well and safely, so there's a challenge between the two. Ultimately we're customer-driven, so now we make things in a safe manner and break some of the rules, too."
"Bay Area companies like Tesla and Apple want to fail faster to succeed sooner," adds Foote. "In Detroit for example, there's a seven- to 10-year development cycle. That's why Tesla is so different. They don't follow that old way of thinking. The idea is to iterate constantly and invent, invent, invent."
Being an ISO 9001:2015 certified company also helps Scandic as a reliable supply chain manufacturer. That too, however, comes with its challenges. "My wife and I were at home once and we got a knock at the door on New Year's Eve," says Foote. "An engineer from a large personal computer company knew where I lived. Once I opened the door, he got on his phone and called China to assure them he got a hold of me. The parts they had ordered from Asia had failed and he wanted his boss to know that he tracked me down and everything was going to be okay! When you're part of the supply chain to a customer, you don't say no. You find a way to make them source domestically. It's more of a mindset that can be summed up with a popular phrase in the Asian business culture that says, 'We will not be the nail that sticks up'."
Sourcing materials is also key to Scandic's success. Knowing what metals work best under the intense pressures of stamping makes rapid prototyping more efficient. "Sourcing good materials is one of the ways we distinguish ourselves from offshore companies," says Foote. "One hundred percent of our materials are sourced domestically. We have long-term relationships with suppliers that have high industry standards and our customers are very comfortable with our suppliers."
Challenges: "The cost of housing is high in the Bay Area," says Foote. "Being able to have a balance of paying [employees] enough to keep them engaged and living the life they want to live is tough. We pay a lot more because we have to."
Opportunities: "We have Silicon Valley in our backyard, and that offers a firehose of opportunities for tech parts," says Foote. "They would rather deal with us because we're here."
Needs: "We need future engineers and floor managers," says Foote. "To get them, we work closely with schools and community colleges to recruit applicants. We paid for one student to go to San Francisco State to get an engineering degree. We currently have two other employees taking college-level classes. It's a tiny expense in an annual budget to send someone to college, compared to what we and they get out of it."